Permian Basin Assets Replaced Canadian Assets
Introduction…Marathon Oil (NYSE: MRO) is selling its Canadian subsidiary, including the company’s 20 percent non-operated interest in the Athabasca Oil Sands Project, to Royal Dutch Shell PLC and Canadian Natural Resources Ltd. for around $2.5 billion in cash, according to a March 9 release.
Additionally, Marathon scooped up 70,000 acres in the Permian Basin from Midland, Texas-based BC Operating Inc. in a deal worth about $1.1 billion, per the release. That includes about 51,500 acres in the Northern Delaware Basin portion of the Permian.
According to the Wall Street Journal, Shell announced it’s selling all of its Canadian oil-sands projects for around $7.25 billion. Shell will keep a 10 percent interest in Athabasca with Canadian Natural (NYSE: CNQ). Meanwhile, Irving, Texas-based rival Exxon Mobil Corp. (NYSE: XOM) recently said production wasn’t profitable in the region and removed around 3.3 billion barrels of oil from its stated reserves, much of which was attributed to the oil sands, the WSJ reports.
In conclusion... Canadian oil sands are falling out of favor with majors due to its high production costs. On the other hand, Permian Basin oil and gas production is highly favored due to its relatively low production cost and its well established iinfrastructure .
Permian Basin is also favored by our partners who are purchasing saltwater disposal wells due to increased production of water from the new oil production.